Marianne Curphey
AUTHOR Marianne Curphey| CREATED 21 Sep 2015

My advice: get advice

Statistics show that people who take advice and have a financial plan in place regarding their future needs enjoy a better standard of living in retirement. In fact, the results are striking.

Research by Old Mutual Wealth1 found a 53% uplift in retirement income between those who have never sought advice and those who see a financial adviser regularly.

Here are the figures:

  • The average retirement income in the UK is £19,700.
  • For those who have never sought advice this falls to £18,138.
  • Regular financial advice, together with a target income to aim for, helps secure an average income in retirement of £27,736.
  • “It’s a double win,” says Jon Greer, pension expert with Old Mutual Wealth. “By seeing an adviser, you have a clear idea of where you are going and know how to achieve it. Plus you have the peace of mind that you are doing the right thing.”

What a financial adviser does

An adviser will help you work out if your current savings, including those held in pension arrangements are enough for your needs. As part of your consultation he or she will:

  • Help establish your retirement objectives.
  • Help you create a vision of your retirement
  • Work out your attitude to risk and how much you are willing to take
  • Identify your capacity for loss
  • Find out how much income you will need
  • Discuss asset allocation. This is to help you decide what you are going to put in your retirement basket of investments – equities, bonds, cash, property or other assets?
  • Outline the options available when you retire, which investments to use when to deliver your income needs and in relation to your pension savings which options to use– drawdown or annuity, or a mix?

“An adviser will help you decide what you need to do to get a specific level of income and what risk you want to take,” Jon Greer explains. “Will the retirement options available from your current pension arrangements meet those needs?”

Make it a regular thing

Your adviser will also suggest you meet regularly to review your plan. Here are issues you might discuss:

  • Have your personal circumstances changed?
  • Have your financial goals changed?
  • How have your investments performed?
  • Do you have enough income?
  • Are there any legal or tax changes that will affect you?

There’s another reason why taking advice is so useful, says Ian Millward of advisers Candid Financial Advice. “At first, it’s all fresh in your mind, but after six months you’ve probably forgotten about your investment goals,” he says.

“Also, when markets are volatile, it’s good to have a trusted adviser you can talk to. The falls that we have been seeing recently in the markets are hard even for robust and rational people and can test their resolve. It’s helpful to have reassurance and guidance from an adviser that you trust.”

1 Redefining Retirement 2015, Old Mutual Wealth

Marianne Curphey

Financial Journalist FREELance

Marianne Curphey writes on investment and personal finance for national magazines, newspapers and websites including BBC Worldwide, the Daily Telegraph, Sunday Telegraph, Times, Guardian and Observer. She is author of Family Resilience, a Centre for the Modern Family report published in June 2012. This report looks at what sustains and nurtures families – what makes individual members of a family more resilient to life’s challenges and crises.